Question

[The following information applies to the questions displayed below.] Ricky’s Piano Rebuilding Company has been operating for one year. On January 1, at the start of its second year, its income statement accounts had zero balances and its balance sheet account balances were as follows: Cash $ 6,250 Accounts Payable $ 8,600 Accounts Receivable 31,500 Deferred Revenue (deposits) 3,850 Supplies 2,400 Notes Payable (long-term) 42,750 Equipment 15,200 Common Stock 9,000 Land 8,250 Retained Earnings 12,300 Building 12,900 Following are the January transactions: Received a $950 deposit from a customer who wanted her piano rebuilt in February. Rented a part of the building to a bicycle repair shop; $370 rent received for January. Delivered five rebuilt pianos to customers who paid $19,600 in cash. Delivered two rebuilt pianos to customers for $9,700 charged on account. Received $8,650 from customers as payment on their accounts. Received an electric and gas utility bill for $825 for January services to be paid in February. Ordered $1,125 in supplies. Paid $3,250 on account in January. Paid $12,500 in wages to employees in January for work done this month. Received and paid cash for the supplies in (g). 5-a. Prepare an income statement for the month ended and at January 31. 5-b. Prepare a statement of retained earnings for the month ended and at January 31. 5-c. Prepare a classified balance sheet for the month ended and at January 31.

Answer 1

Credit ($6250+$950+$370+$19600+$8650-$3250-$12500-$1125] [$31500 + $9700 - $8650] [$2400 + $1125] Ricky's Piano Rebuilding Company Trial Balance (Updated) January 31 Account Title Debit Cash $18,945 Accounts Receivable $32,550 Supplies $3,525 Land $8,250 Building $12,900 Equipment $15,200 Accounts payable Deferred Revenue Notes Payable Common Stock Retained Earnings Service Revenue Rent Revenue Salaries Expense $12,500 Utilities Expense $825 TOTALS $104,695 $6,175 ($8600 + $825 + $1125 - $3250-$1125] $4,800 [$3850 + $950] $42,750 $9,000 $12,300 $29,300 ($19600 + $9700] $370 $104,695

5a) Ricky's Piano Rebuilding Company Income Statement For the Month Ended January 31 Service Revenue $29,300 Rent Revenue $370 Total Revenues Expenses: Salaries Expense $12,500 Utilities Expense $825 Total Expenses Net Income $29,670 $13,325 $16,345 Ricky's Piano Rebuilding Company Statement of Retained Earnings For the Month Ended January 31 Retained Earnings - Beginning Balance 5b) $12,300 [Ref: Income Statement] Add: Net Income $16,345 Less: Dividends Net Increase in Retained Earnings Retained Earnings - Ending Balance $0 $16,345 $28,645

5c) $10,975 Assets Current Assets: Cash Accounts Receivable Supplies Total Current Assets Property, Plant & Equipment: Land Building Equipment Ricky's Piano Rebuilding Company Balance Sheet January 31 Liabilities & Shareholders' Equity Current Liabilities: $18,945 Accounts payable $6,175 $32,550 Deferred Revenue $4,800 $3,525 Total Current Liabilities $55,020 Long-Term Liabilities: Notes Payable (Long-Term) $8,250 Total Liabilities $12,900 $15,200 Shareholders' Equity: $36,350 Common Stock Retained Earnings $28,645 $36,350 Total Shareholders' Equity $91,370 Total Liabilities & Shareholders' equity $42,750 $53,725 $9,000 $0 [Ref: Statement of Ret. Earnings) Less: Accum. Dep.- Off. Equip. Property, Plant & Equipment, Net Total Assets $37,645 $91,370